Consumer Confidence Unexpectedly Declines

U.S. consumer confidence in January gave back some of the huge gains posted in the previous two months, according to a report released Tuesday. Views on labor markets darkened.

The Conference Board, a private research group, said its index of consumer confidence retreated to 61.1 this month from a revised 64.8 in December, first reported as 64.5. The January index was far less than the 68.0 expected by economists surveyed by Dow Jones Newswires.

The fallback was concentrated in consumers’ view of the current economy. The present situation index, a gauge of consumers’ assessment of current economic conditions, dropped to 38.4 in January from a revised 46.5, originally reported as 46.7.

Consumer expectations for economic activity over the next six months slipped only slightly, to 76.2 in January from a revised 77.0, first reported as 76.4.

“Regarding the short-term outlook, consumers are more upbeat about employment, but less optimistic about business conditions and their income prospects. Recent increases in gasoline prices may have consumers feeling a little less confident this month,” said Lynn Franco, director of the Conference Board Consumer Research Center.

Perceptions about the job markets worsened this month. The survey showed 43.5% think jobs are “hard to get” up from 41.6% saying that in December, while only 6.1% think jobs are “plentiful” down from 6.6% in December.

The more-cautious results are in line with expectations among economists that nonfarm payrolls did not grow as robustly this month as they did in December. Economists expect only 125,000 jobs were added in January, less than the 200,000 created in December. The government’s job report is scheduled to be released Friday.

But consumers think the job situation will improve slightly over the next six months. The report shows 16.2% think there will be more jobs, up from 14.0% thinking that in December, and 19.5% expect fewer jobs, down from 20.2% in December. Households remain worried about future income, with only 13.8% thinking their incomes will increase over the next six months, down from 16.3% in December.

The report shows consumers, on average, expect inflation to be 5.5% twelve months from now, up from the 5.3% rate expected in December.

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